The massive tax reform bill approved by the U.S. Senate no
longer includes a provision that for the first time would have taxed
foreign-flagged cruise ships on part of their income derived from cruise
Also, the Senate eliminated a measure in the bill that would
have charged corporate income taxes on certain foreign airlines.
Originally, the bill applied income tax to the operations of
foreign-flagged ships within the 12-mile reach of territorial waters of the
Sen. Dan Sullivan (R-Alaska) had the provision tabled,
arguing that it would hurt Alaska tourism, about half of which comes from
cruise ships. A spokesman for the senator told NBC News that the tax would
disproportionately impact the Alaska economy.
A budget document from the Congressional Joint Committee on
Taxation projected the cruise tax would have raised about $100 million a year
The airline tax proposal, which had been put forth by Sen.
Jonathan Isakson, a Republican from Delta's home state of Georgia, would most
notably have impacted Gulf airlines Emirates, Etihad and Qatar Airways.
For close to three years, Delta and fellow U.S. legacy
carriers United and American have lobbied the federal government to sanction
the Gulf carriers, which they accuse of violating international aviation
agreements for accepting a combined $50 billion in state subsidies since 2004.
U.S. Travel Association executive vice president Jonathan
Grella praised the removal of the measure.
"This is the most significant moment in the three-year
war on open skies," he said. "Bipartisan lawmakers have wisely
rejected this last-ditch effort to stymie connectivity and choice."
The Senate proposal had called for the collection of income
taxes from foreign carriers for routes that stop in the U.S. The rule would
only have applied to airlines based in countries or territories that do not
have a tax treaty with the U.S. and to where U.S. airlines fly no more than
According to an analysis by the Wall Street Journal, the
provision would have applied to 14 countries and territories, among them Qatar
and the United Arab Emirates, which are home to Qatar Airways, Emirates and
Others impacted by the proposal would have been the British
Virgin Islands, Cape Verde, Ethiopia, Fiji, French Polynesia, Jordan, Kuwait,
Malaysia, Samoa, Saudi Arabia, Serbia and Suriname.
The measure would have cost foreign air carriers an
estimated $200 million over the next 10 years, according to the Joint Committee
In the U.S. and other countries, foreign airlines are made
exempt from paying taxes on international routes so they don't have to pay
income taxes in their home country and abroad.
Isakson's proposal was cut from the Senate tax bill because
it was found to violate the Byrd rule, Politico reported. The Byrd rule
prohibits extraneous provisions from budget bills that are being voted on under
a fast-track process called reconciliation, in which only a simple majority is
needed for passage and filibusters aren't allowed.
Among the organizations that opposed the Senate measure was
IATA, which warned that that reciprocity between governments on taxation is
crucial to the global airline industry. The provision, IATA said, would have
upended decades of precedent on the taxation of international aviation.